Employment status: what comes first?

Grand national

The OTS’s Employment Status report (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/408608/OTS_Employment_Status_report.pdf) is a lengthy document with some 28 recommendations. It is deliberately aimed at the longer-term reform of the area, though there are some improvements (for example in some HMRC procedures) that could be made more quickly.
With such an extensive report – though it is of course a gripping read – we have understandably been challenged by some people in terms of ‘OK, great stuff, but which are the most important recommendations?’ Our response – as might be expected – is ‘all of them’, on the basis that we want the report to be read and considered as a package that could pave the way to significant simplification.
It is also quite difficult to select the ‘most important’ recommendations because much will depend on the approach to simplification that is to be pursued. A discussion among the team that worked on the report couldn’t come to a consensus on a 1/2/3 rating but there was a definite front-runner, with a number of other fancied horses pressing hard.
Followers of the OTS’s work won’t be surprised to hear that we see progressing income tax/NIC alignment as the most important area, including looking at wider issues such as employers’ NICs. Those coming up on the rails are:
• Exploring the statutory employment test idea
• HMRC admin, particularly developing a ‘safe harbour’ approach, possibly using the Employment Status Indicator
• Developing a code of principles on what constitutes ‘employment’, involving all relevant departments (i.e. BIS, DWP as well as HMRC)
That still leaves 20+ other runners jockeying for position and we would stress that we’d ideally like them all to reach the finishing line (which in these terms means being properly considered and taken forward to consultation at least in part). But we’d welcome views on the most important of our recommendations.

What would your 1/2/3 be – or indeed any that you think should fall at an early hurdle? Let us know at ots@ots.gsi.gov.uk .

John Whiting, OTS Tax Director

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